Asia Pulse - Q3 2023

Welcome to the Q3 2023 edition of Asia Pulse.

In the third quarter of 2023, the FMCG industry in the APAC region continued its impressive upward trajectory with a growth rate of 1.4%. Delving into the dynamics of 11 markets, the report reveals a landscape in which the West and South Asia regions have emerged as primary growth drivers, while other areas within Asia are playing catch-up.

Market highlights:

• Chinese Mainland

Compared to the same period last year, the value share of the top 10 retailers in modern channels collectively declined by 4%, indicating further fragmentation. Major retailers are exploring new strategies such as premiumisation, digitalisation, and localisation to break through in this competitive landscape.

• Taiwan

While the performance of food sector remained steady overall, the leisure food and chocolate categories saw increased sales, due to the ability of brands to resonate well with consumers. Demand for health supplements cooled, while growth in dairy lacked momentum. On the other hand, personal care and cosmetics made a significant contribution to the FMCG market’s overall growth.

• India

FMCG consumption has grown at a healthy pace of 3.1%, compared to 2.6% in the period ending June 2023. Beverages is the fastest growing sector at 5.7%, led by the milk food drinks category. Grocery has the second fastest growth at 5.2%, driven by categories like chocolate, atta, and breakfast cereals.

• South Korea

The online channels continued to show positive growth even after the Korean government declared an end to COVID-19. Online channels achieved the highest growth in shopping occasions, and maintained the biggest trip basket among key channels, indicating that a continual increase should be expected.

• United Arab Emirates

Market dynamics are compelling retail behemoths Carrefour and Lulu to innovate in order to remain relevant amid shifting consumer behaviours. Rising stars like discounter Viva and new hypermarket players such as Nesto are gaining market share and reshaping expectations by offering value-driven alternatives.

• Indonesia

Ongoing price rises remain the primary driver of growth across different socioeconomic segments, and are driving lower shopping frequency. This means it is important for brands and manufacturers to leverage every shopping occasion to recruit new buyers.

• Malaysia

Higher prices continue to be the primary catalyst driving spending growth. In response, consumers are strategically managing their spending by reducing the size of their shopping baskets and eliminating non-essential ‘nice to have’ categories.

• Thailand

As Thai consumers started to resume out-of-home (OOH) activities following COVID-19, the demand for take-home groceries reduced. In addition, Thai households still have a high level of debt and are benefiting less from government subsidies, making them cautious in their spending.

• Philippines

As Filipinos spend more OOH, they are keeping control of their FMCG budgets by constantly reviewing their product and channel choices. Shoppers are also compromising by making more trips, but spending less on every purchase occasion.

• Vietnam

Although price rises are cooling off, this remains the key driver behind FMCG’s growth. Meanwhile, volume growth has hit a standstill across many sectors, except the non-food categories. Channel-wise, the value contribution of traditional trade is shrinking over time, paving the path for the development of online and mini stores.

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Note: The Asia Pulse Q3 2023 excludes Saudi Arabia due to local panel enhancement.